Gordon Brown: Prime Minister. Tom Bower
To expunge the memory of Harold Wilson’s devaluation of sterling in November 1967 and the humiliation of Denis Healey begging for help from the International Monetary Fund in October 1976, it was best, they agreed, to support Britain’s entry into the Exchange Rate Mechanism. Labour’s support for the ERM would convince the electorate of the party’s commitment to non-inflationary policies. Smith and Brown approached Neil Kinnock for his support. Kinnock, who was equally worried about Labour’s image as irresponsible economic managers, was persuaded by the other two that the party needed to become conventional about spending and inflation, and against devaluation. Supporting the ERM, he was told, would prove Labour’s responsibility. At the same time, the party should also abandon its undertaking to withdraw from the European Union and even pledge to revalue the pound if the Tories devalued.
During those weeks, Brown did not ask himself how he, an anti-monetarist, could support the identical policy as Nigel Lawson, a monetarist. The more important conundrum was preventing new divisions in his own party. Inevitably, there would be arguments and casualties. Once Kinnock had committed Labour to Europe, the anti-Europeans would fight back, especially Bryan Gould, the aspiring left-wing leader of the party who was still promoting renationalisation and devaluation. The only solution to Gould’s opposition, Brown and Smith might have agreed with Samuel Brittan of the Financial Times, was to ‘put him on a slow boat to China’. Brown’s method was more subtle. By stealth, Gould’s influence was to be obliterated.
At the shadow cabinet meeting on 16 November 1989, John Smith described his proposed embracing of the ERM. By not joining, Brown added, Britain’s prosperity had been damaged. As predicted, Gould protested, outrightly opposing a policy switch. Kinnock did not respond. ‘It’s like fighting a marshmallow,’ Gould realised. ‘No one is willing to take me on.’ At the end of that day Gould blamed Mandelson for his humiliation, but in retrospect he understood his mistake. Gordon Brown, not Mandelson, had been planning his downfall, but Brown’s opposition had been so ‘subterranean’ that Gould had wrongly identified his enemy. He was being sidelined by Brown on the grounds of personal dislike and political disagreement. Lacking a powerbase within the party, Gould could not outwit a machine politician with fifteen years’ experience in Scotland of settling grudges without overtly plunging the dagger. ‘I’m being destroyed by stealth,’ Gould complained. ‘I’ve never been confronted with the reasons for my demotion.’
Brown misunderstood the ERM. At a subsequent meeting of the Parliamentary Labour Party (PLP) to discuss the system, he told MPs that by linking the value of sterling to that of other currencies, Britain would be applying socialist planning to the economy rather than relying on market forces. In crude terms, he was convinced that the ERM would disarm, even punish speculators. ‘We can fight speculators if we join the ERM,’ he told the PLP, revealing his ignorance of the mysteries of markets. He failed to understand that speculators profit from fixed exchange rates, and that membership of the ERM would prevent Britain from unilaterally changing its interest rates. ‘This is the economics of the madhouse,’ thought Gould as he listened to Brown’s arguments. Brown and Smith, he realised, genuinely believed that the ERM was ‘a new magical device which would insulate their decisions about the currency against reality’. Brown was deluded that a handful of central bankers could beat the money markets.
To improve his understanding of economics and improve his relationship with the media, Brown recruited three advisers – Geoff Mulgan, Ed Richards and Neal Lawson. Mulgan, the senior adviser, had already established a relationship with Bill Clinton’s staff in order to learn how Labour might change its image and policies to appeal to the middle classes. Richards and Lawson were young and inexperienced, but satisfied Brown’s need for help both to mount a sustained attack against Thatcherism and to promote himself within the party.
Margaret Thatcher’s encouragement of greed, according to Brown, had splintered British society. In a seminal article published in the Guardian on 21 September 1990, he expounded his loathing for ‘an ageing leader’ who sounded too old to care and who was, like Mao, determined to stay on at any price. His accusations were harsh. The result of her ‘dream of unrelieved competition to produce improvement’, Brown wrote, accompanied by the ‘nightmare of any support by the state’, had been that ‘the rich have done better, the poor worse’. He railed against Thatcher’s ‘unfettered market’, her ‘promoting self-improvement of the poor’ and the ‘weaning [of the poor] from welfare’. He attacked the proposed privatisation of prisons, air traffic control and London Transport as sinful, cursed by ‘the enthusiasms of an extremist tendency too young to care’. The Thatcherites’ pretensions and wild assertions were, he wrote, merely a smokescreen to ‘promote self-indulgence among the very rich’.
In a similar vein he toured Labour associations, occasionally helped by Douglas Alexander, a young Scottish lawyer crafting his speeches, damning the ‘markets [which] cannot educate’ and urging investment in British technology to fill the country’s ‘innovation gap’ and ‘training gap’. His campaign was not universally applauded by his colleagues. He was accused of being an effective critic, delivering coruscating diatribes against Thatcherism, but providing few new ideas for a cure. He spoke fluently, full of certainties, simultaneously as a moderniser and a traditionalist, but seemed uncertain about the consequences of his proposals. His reputation rested on his industry, but the party’s intellectuals wanted a heavyweight, left-wing analysis of Thatcherism. They questioned whether Brown was merely a Labour loyalist, promising the creation of ‘economic powerhouses’ to create jobs and an end of unemployment, or an original thinker. His journalistic, broad-brush approach to politics, rarely arguing about socialist philosophy, was proof for his critics of frivolity. ‘He has a moral revulsion against the government,’ wrote Paul Addison, ‘but you felt he would only offer a more decent form of Thatcherism in its place. It’s no longer really a socialist solution.’
Brown hated any criticism, and these attacks were particularly serious. His reaction was noticeable. The formerly witty, approachable man was gradually assuming the posture of a burdened statesman. To prove his suitability for power and to protect himself from making mistakes, he adopted a new gravitas in order to help establish Labour’s reputation for competence. Journalists travelling with him noticed how his good humour evaporated when a camera appeared, and despite his friendship with an interviewer, a sheet of plate glass would suddenly seem to separate the two. Anxious to micro-manage his appearances, Brown adopted a habit of robotic repetition. One memorable example of his repeated attempts to manipulate the agenda occurred during an interview with David Frost. In reply to an enquiry, Brown said, ‘That isn’t the question.’ Frost retorted, ‘Yes it is, because I just asked it.’ The mystery for his new audience was whether Gordon Brown would emerge as an undisputed leader thanks to some hitherto unseen magic, or whether the enigma merely masked blandness.
His opportunity to disarm the cynics came on 5 October 1990, the last day of the Labour Party conference in Blackpool. After many bitter arguments, Margaret Thatcher had reluctantly announced that Britain would join the ERM, at the rate of £1 for DM 2.95. Critics immediately predicted disaster, believing that the pound was overvalued. The prime minister was beleaguered. By contrast, Smith and Brown appeared serene. Labour’s lead in the polls had soared to double figures, and the party leadership, convinced of the country’s weariness with Thatcher, believed that electoral victory was inevitable. The question was whether Labour would support the government’s application to join the ERM at the high exchange rate. Most people were unaware that a year earlier, John Smith had quietly announced his support. At 4 p.m. on the last day of the conference, Roy Hattersley called Smith. ‘What’s our policy on ERM?’ he asked. ‘No alternative but to support the government,’ said Smith.
Five years earlier the party, including Blair and Brown, had supported a policy of withdrawal from the European Union. Brown had played a significant part in transforming Labour into a more electable party, as had Blair. Charles Clarke, Neil Kinnock’s chief of staff, had asked John Monks, then deputy general secretary of the TUC, to meet the two MPs as examples of the party’s encouraging future prospects. In Monks’s opinion, Blair had proven his abilities in 1988 by astutely negotiating